Asset Manager leverages machine learning from Linedata
Asset management firms understand the power of machine learning to unlock business insights and create alpha. Now Linedata Analytics Service is using advanced machine learning models to help clients predict and prevent events that could result in operational losses. The service is tailored to each firm’s specific requirements, hosted in the cloud and integrates client and third-party data.
One client, a large European Asset Manager with high trading volumes, was experiencing significant cost and potential risk from a large number of trade amendments requiring manual intervention. All trade types were affected, including corporate actions.
Although the management team didn’t know what caused trading breakdowns, they suspected that data mismatches, system design and integration issues, and human error were contributing factors. The COO asked: “Why, after all of our checks and balances, do my people still spend extra time on post-trade amendments?”
Our client used Linedata Analytics Service to reduce manual intervention related to trade amendments, mitigating cost and operational and reputational risk.
As our client’s management team grappled with these challenges, they turned to us for answers. Linedata experts ran a series of workshops with the client’s leadership team , including the COO and Heads of Innovation, Data Management and Middle Office Accounting.
We discussed their pain points and business objectives and devised a solution built around machine learning models that would identify patterns of behavior that they had not recognized previously as causes and precursors to operational failure. Together, we designed a cost-effective, future-proof solution reflecting the client’s forward-thinking approach to technology as an enabler of growth.
Data-driven insights, powered by machine learning
Many companies can write powerful machine learning algorithms, but few possess Linedata’s deep knowledge of asset management operations. Our project team of systems and operational experts and data scientists drew on Linedata’s 20-plus years as a global provider of asset management solutions as they set out to determine what was causing trade failures: internal process breakdowns, data feed issues, or other unknown causes? The resulting machine learning models consumed the client’s trade and operational data, analyzing combinations of factors including asset types, trade venues and input sources to determine which trades were most likely to require amendment. The models also looked at the relative reliability of price types from different sources, and whether trades at certain times of the month or year were more error prone.
By evaluating data over time and running hundreds of scenarios, the models were able to predict exceptionally busy days, enabling the firm to ensure correct staffing and appropriate planning. Potentially risky trades and associated operational and data processes were also highlighted for process improvements.
The actionable insights provided forward-looking scenarios where certain transaction types might have high failure rates based on prior experience. And, by focusing on why trade failures occurred, Linedata Analytics Service helped the firm make changes to improve operational outcomes.
Driving continuous improvement
Implementing the insights provided by Linedata has enabled our client to significantly reduce its trade amendments and achieve process improvements and related cost and efficiency benefits. But such initial gains are far from a one-off exercise. The Linedata Analytics Service models continually ‘get smarter’ in line with the evolving business and operational context, driving a virtuous continuous improvement circle. Clients can further fine-tune their operations, mitigate operational and reputational risk, and lower their cost curves, making Linedata Analytics Service a‘ virtual partner’ in achieving their business objectives.
About Linedata
With 20 years’ experience and 700+ clients in 50 countries, Linedata’s 1100 employees in 20 offices provide global humanized technology solutions and services for the asset management and credit industries that help its clients evolve and operate at the highest levels.
About Linedata Analytics Service
Linedata Analytics Service drives a virtuous circle of continuous improvement, enabling clients to further fine-tune their operations, mitigate risk, and lower their cost curves. The service delivers actionable insights that managers and operational staff leverage to implement day-to-day changes as well as future planning.